Tag Archives: ITC

The International Trade Commission (ITC) is a step closer to having a full six-person membership. Jason Kearns, who had been nominated to the commission by President Barack Obama days before he left office, is expected to be re-nominated for the same post by President Donald Trump.

The president announced his intention to nominate Kearns on June 26.

The vacancy on the commission became important to the tire industry in February when the ITC voted 2-3 against the imposition of tariffs on truck and bus tires imported from China. A sixth member of the commission recused himself from the tariff investigation, and many cited his absence as the key factor. If the commission’s vote had resulted in a tie, tariffs would have been imposed.

Kearns, of Colorado, currently serves as chief international trade counsel, on the Democratic staff, to the Committee on Ways and Means in the U.S. House of Representatives. He advises members of Congress on legislation related to trade and oversight issues with the office of the U.S. Trade Representative. He previously served three years in the Office of the General Counsel to the U.S. Trade Representative, and from 2000 to 2003 worked in international trade with the law firm WilmerHale.

If approved, Kearns would serve the remainer of a nine-year term, which expires Dec. 16, 2024.

In May Marangoni Tread North America Inc. filed a petition on the White House website on behalf of the retreading industry, asking the president to fill the vacant spot on the commission, and hopefully review the truck tire case. The petition fell far short of its goal of 100,000 signatures, which is the threshold for the White House to respond to any petition it receives.

In a press release following the president’s nomination announcement, Marangoni says, “The petition drive was linked to the industry’s desire to see the U.S. government reconsider an investigation into the perceived damage to the U.S. truck tire manufacturing and retreading industries from low-priced, low-quality Chinese imports.”

The International Trade Commission (ITC) says there’s evidence of “significant” underselling of Chinese truck and bus tires from 2013 to 2015, and that the underselling margins generally increased over that time frame.

Yet, the ITC voted not to impose tariffs on those imported tires.

“We do not find that subject imports depressed U.S. producers’ prices to a significant degree.”

Here’s what Modern Tire Dealer is learning as we wade through the ITC’s final report following its decision not to place tariffs on truck and bus tires from China.

In the final phase of its investigation, five domestic tire producers and 27 importers provided usable pricing data on four tires for drive applications (excluding all-position) tires:

“While subject import prices also generally declined, the record does not support a finding that subject imports caused price declines for domestically produced truck and bus tires.

“In particular, the record indicates changes in the cost of underlying raw materials affect the price of truck and bus tires. By any metric observed, raw material costs fell by considerably more than the price of domestically produced truck and bus tires during the period of investigation. Between January 2013 and December 2015, the price of rubber, the primary raw material used in the production of truck and bus tires, fell precipitously.”

In that same two-year time frame, the ITC says the per-unit cost of the industry’s raw materials fell from $144 per tire in 2013 to $109 per tire in 2015, a decline of $35 per tire or 24.3%.

To compare, the average unit value of commercial tire sales dropped from $324 per tire in 2013 to $292 in 2015, a decline of $32 per tire or 9.9%.

“Further, the ratio of the domestic industry’s underlying raw material costs to the value of the industry’s total net sales fell from 44.9% in 2013 to 42.3% in 2014, and fell further to 37.6% in 2015, indicating that the industry received increasing revenues on commercial sales relative to underlying raw material costs over the period of investiation. Due to the magnitude of the decline in raw material costs, we do not find that the subject imports depressed U.S. prices to a significant degree.”

The commission also didn’t find evidence that the imported tires prevented price increases on domestic prices.

The ITC says the “pervasive underselling” by the imported tires from China didn’t prevent the domestic industry from increasing shipments. The truck and bus tires from China also undersold imports from other countries, but the ITC says shipments of tires from those other countries “increased at approximately the same rate” as the tires from China.

No tariffs will be assessed on truck and bus tires manufactured in China and imported into the U.S. The International Trade Commission (ITC) has upended the tariff investigation by voting today against imposing tariffs on these products.
The ITC doesn’t immediately publish an explanation of its vote, but instead issues a single sentence that it has “made a negative determination.”

The result is that the tariff investigation on truck and bus tires from China is over, and no tariffs will be assessed.

The vote

After it’s initial one-sentence announcement this morning, the ITC has provided one more detail on its decision. The five-member commission voted 2-3.

Commissioners Rhonda Schmidtlein and Irving Williamson voted in the affirmative (which was a vote to impose the tariffs,) and commissioners David Johanson, Meredith Broadbent and F. Scott Kieff voted in the negative.

A sixth member of the commission, Dean Pinkert, did not participate in the case. Pinkert also recused himself from the separate investigation studying tariffs on off-the-road tires earlier this year.

The report

Weeks after an ITC vote, the commission provides insight into its decision. That report will be available by March 15, 2017, here.

Data provided to the International Trade Commission (ITC) shows imported truck and bus tires from China undersold domestic like products in 55 of 56 quarterly comparisons.

At the same time, the ITC says the underselling didn’t force a drop in U.S. tire prices.

Two members of the ITC said they didn’t see evidence of injury to the domestic truck tire market, and instead noted “the domestic industry’s performance improved.”
The disconnect in prices is revealed in a 154-page explanation of the ITC’s vote on March 11 to continue its preliminary investigation of imported truck and bus tires from China. The U.S. Department of Commerce is now conducting its own investigation of whether imported tires from China should be subject to countervailing and anti-dumping tariffs.
Four domestic truck tire producers — Bridgestone Americas Tire Operations LLC, Continental Tire the Americas LLC, Goodyear Tire & Rubber Co., and Michelin North America Inc. — and 21 importers provided pricing data for four products.

“The data show that subject imports undersold the domestic like product in 55 of 56 quarterly comparisons. Virtually all of the subject imported tires for which prices were reported undersold domestic industry prices.

“The data also indicate that the underselling margins of subject imports were high, ranging from 13.7% to 67%, and that these underselling margins increased steadily over the course of the period of investigation. This underselling enabled subject imports to gain market share at the expense of the domestic industry during the period of investigation. We find this underselling to be significant for purposes of our preliminary determinations.”

But in the next paragraph, the ITC says the prices of those imported tires didn’t depress the prices of U.S. products “to a significant degree.”

The manufacturers and importers compared prices on tires in these sizes.

11R22.5, 16 ply rating, load range H, speed rating L

11R24.5, 16 ply rating, load range H, speed rating L

295/75R22.5, 14 ply rating, load range G, speed rating L

285/75R24.5, 14 ply rating, load range G, speed rating L

“The pricing data indicate that both prices for the domestic like product and subject imports declined over the period of investigation. From 2013 to 2015, declines in prices for the domestic like product of the four pricing products ranged from 10.9% to 13.5% for aftermarket sales, and from 8.2% to 12.3% for OE sales.

The commission notes that the price drops coincided with a drop in raw material prices, and at this point, the ITC isn’t able to determine whether the domestic price declines are due to imports, or other factors. The ITC says it will seek additional information in the next stage of the investigation regarding the factors that contributed to the price declines.

At the same time, the ITC said it couldn’t determine that imported truck and bus tires prevented domestic tire manufacturers from increasing prices.

“The domestic industry’s unit costs declined, as did its ratio of cost of goods sold to net sales. Thus, the domestic industry did not have an incentive to raise its prices due to increasing costs. Further, even though apparent consumption increased, the record in these preliminary investigations does not show any unsuccessful attempts by the domestic industry to raise its prices.”

A dissenting view

Two ITC members saw no indication that the U.S. tire industry was being harmed or threatened by truck and bus tires imported from China, but they were in the minority. Still, Commissioners Meredith Broadbent and Scott Kieff presented their dissenting views.

They based their dissenting votes on four factors, two of which come down to dollars and cents: “the lack of significant price-depressing or suppressing effects, and the high and increasing profitability of the domestic industry throughout the period of investigation.”

As to the latter, the commissioners wrote, “The domestic industry’s performance improved in almost every category for which information was collected over the period of investigation.”

Capacity utilization increased, from 83.8% in 2013 to 93.5% in 2015. Domestic and export shipments in 2015 were higher than two years earlier, and net sales were higher, too. The number of production workers, their hours worked and their wages paid, all rose.

And, “the domestic industry’s financial performance improved in every metric.” The industry “had high and rising profits” throughout the period of investigation.

“Not only did the industry show consistent and significant improvement in almost every metric, it did so as subject import volume was increasing. The industry’s highest levels of production, capacity utilization, employment, and profits occurred in 2015, as subject import volume and market share peaked.” — Joy Kopcha

Why did the United States International Trade Commission (ITC) determine, in its own words, “there is a reasonable indication that a U.S. industry is materially injured or threatened with material injury by reason of imports of certain passenger vehicle and light truck tires from China that are allegedly subsidized and sold in the United States at less than fair value”?

Here is the fact sheet from which the ITC based its decision (“ITC says Chinese imports may be harmful”).
1. Number of domestic tire producers in 2013: Nine.
2. Location of producers’ plants: Alabama, Arkansas, Georgia, Illinois, Indiana, Kansas, Mississippi, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina and Virginia.
3. Employment of production and related workers in 2013: 29,000.
4. Apparent U.S. consumption in 2013: $22.3 billion.
5. Ratio of the value of total U.S. imports to total U.S. consumption in 2013: 47%.
6. Worth of consumer tire imports from China in 2013: $ 2.3 billion.
7. Worth of consumer tire imports from other countries in 2013: $ 8.2 billion.
8. Leading sources of consumer tires, in terms of value, in 2013: China, Canada, Korea and Japan.

And here are the facts as the United Steelworkers International union sees them. The USW filed the initial petitions seeking relief from “unfairly traded Chinese tires.”
“The ITC’s preliminary determination is a vital step on the path to restoring fair trade in passenger vehicle and light truck tires,” says USW International President Leo Gerard.

USW International Secretary-Treasurer Stan Johnson says that “while relief was in place, billions of dollars in investments were made by firms producing tires in the United States in new plant and equipment. But China’s targeting of our industry has injured our members. They work hard and play by the rules and all they want is a fair chance to compete. They deserve to have our nation’s trade laws aggressively and faithfully enforced.”
“We’re waging a fight against unfair trade based on rules that are more than a quarter century old, while our competitors target industry after industry. Things must change. Workers, and America, can’t afford much more of this.”

Your Next Tire has all your tire needs weather you need tires for your minivan, backhoe, dump truck, lawn mower, atv, semi truck or Lincoln Navigator.
We have several warehouses full of tires and ship all over the USA daily. Give us a call at 1-888-513-8473 and check out our website http://www.yournexttire.com

Will the United States International Trade Commission (ITC) once again recommend tariffs be increased on Chinese consumer tire imports? We won’t know for sure until July 18.
If the answer is yes, then the final decision on the implementation of that recommendation likely will be made before the November elections. One of the key elements to be considered in the decision-making process is the effect the tariffs will have on domestic tire pricing. Here’s what happened the first time around.
In 2008, the average cost of a passenger tire in the U.S. was $99.48. The average light truck tire cost $143.33. At the time, there was a 4% duty on all consumer tires coming out of China. Then the real tariffs began.
From Sept. 26, 2009, to Sept. 25, 2010, the tariff was raised to 39%. The next year, it was reduced to 34%. In the third year, it was 29%.
When the additional tariffs ended on Sept. 26, 2012, the duty returned to 4%. At the end of 2012, the average costs of a replacement passenger and light truck tire were as follows:
Tire type 2012 Change from 2008
Passenger $128.64 + 29.3%
Light truck $180.21 + 25.7%

Since most of the tires coming to the U.S. from China were low-cost radials, the average cost of a “good” tire in the “good, better, best” pricing strategy increased. That, in turn, led to an increase in the “better” and “best” tires. Its predicted that tire prices will increase again if more tire tariffs are implemented. And because they haven’t returned to pre-2009 levels, tire prices are going to reach record levels.

Your Next Tire has all your tire needs weather you need tires for your minivan, backhoe, dump truck, lawn mower, atv, semi truck or Lincoln Navigator.
We have several warehouses full of tires and ship all over the USA daily. Give us a call at 1-888-513-8473 and check out our website http://www.yournexttire.com